May 28, 2014

Economics Must Reads

Due to some personal scheduling challenges I have gotten a bit backlogged on posting. In particular, I have fallen behind on opining on some items that are quite worth sharing. Rather than letting them fall by the wayside, I've decided to include the links and some excerpts here in order to hopefully generate some interest in these terrific articles/posts.

...The same sense of limited opportunity that drives the new progressives also motivates the popularity of libertarian and Tea Party activism on the right. Instead of state intervention, these groups have been attracted to the notion that removing barriers to economic growth will increase social mobility more effectively than redistribution by political fiat.

But these economic arguments that could generate more widespread support have been married with increasingly unpopular, often backward-looking social agendas that have allowed the Clerisy to portray them as fringe movements.

This has allowed Obama, de Blasio and others shape a new conversation centered on inequality, rather than growth. Oddly enough, it’s a model that relies on Europe’s example even as the continent’s own economic prospects appear dismal, and mainstream political parties there are registering their lowest levels of popular support in decades.

The article touches on the basis for a prescriptive solution. A good read.

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Has Piketty’s soft Marxism run afoul of hard math? Everybody's talking about Thomas Piketty's far left take on economics. Well, thankfully not nearly everybody. But those who pay attention to economics, debunking Piketty has become a cause célèbre. While it does not deserve the attention it has received, it is worth debunking. The American Enterprise Institute takes it's turn.

Is Thomas Piketty’s sprawling best-seller, “Capital in the Twenty-First Century,” really just a bit of dystopian, neo-Marxist, speculative fiction tarted up with dodgy math? Some free-market types who disagree with the French economist’s controversial analysis and policy prescriptions might like to think so.

But this would be a more reasonable and fair take: extraordinary claims require extraordinary evidence. And Piketty, at the very least, makes a bold claim when he asserts discovery of powerful forces inherent to capitalism driving an “endless egalitarian inegalitarian spiral” of ever-greater wealth concentration. And he offers mounds of data as support.

Previous critiques have questioned his interpretation of the evidence. But the Financial Times now questions the evidence itself. As reporter Chris Giles see it, various data-entry and methodological errors undermine the book’s central findings. This is perhaps the most serious possible mistake: Giles says that Piketty, as the Washington Post puts it, “mixed up different sources on British wealth the last few decades, and overestimated their inequality.”

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For your less talented liberal friends a great visual aid from The Heritage Foundation on where tax money goes. When your progressive friend tells you that America needs to spend less on the military and more on social programs - show them this picture. Then ask yourself why you have a progressive friend.

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The CATO Institute has an interesting take on immigration reform that I'd considered in many other areas but not when it comes to immigration law: let the states decide what is in their own best interest when it comes to immigration volumes and rules. While it may impose a couple of technical challenges, conceptually, the idea is a great one.

A state-based visa program would direct immigration to the states that want it without forcing much additional immigration on those that do not. Unlike existing employment-based visas that tie foreign workers to one firm, state-based visa holders would be free to move between employers in the state—leading to thicker, more equitable, and more efficient local labor markets. A state based visa would increase prosperity by allowing additional migration to portions of the country and economy that demand them. Successful international experiences with regional visas in Australia and Canada provide some valuable policy lessons and hint at the major economic benefits of such a policy in the United States.

That's it for now. This can't be a quick catch-up post if I keep adding to it, now can it?